Apartment property prices may finally stop rising—and even begin to fall—when interest rates start going up.
“The assumption is that capitalization rates would jump higher with interest rates,” says Luis Mejia, chief multifamily economist with research firm CoStar Group.
But the rise in cap rates is likely to come very, very slowly. Cap rates on apartment properties have been going from low to lower for years as apartment prices climbed steadily higher. However, federal officials might soon make a change to benchmark interest rates—the Federal Reserve had strongly hinted it might raise rates at its September meeting. Bad news from the world economy delayed the action, but officials are still likely to raise rates by the end of the year. Higher interest rates usually mean higher cap rates.
Read more...Multifamily Prices Could Stall With Interest Rate Hike
Wednesday, October 14, 2015
Monday, October 12, 2015
What’s Really Driving the Urbanization Trend? via GlobeSt.com
For commercial real estate developers, urbanization is the new black. Of course, it’s not urbanization for urbanization’s sake. Savvy developers are following—and fueling—this trend.
For decades, most Americans settled in the suburbs. Now, there’s a mass exodus—or at least a growing movement—toward urban cores. According to Census Bureau data, American cities are witnessing a renaissance, of sorts, as residents migrate to downtown areas.
Read more...What’s Really Driving the Urbanization Trend? - Daily News Article - GlobeSt.com
For decades, most Americans settled in the suburbs. Now, there’s a mass exodus—or at least a growing movement—toward urban cores. According to Census Bureau data, American cities are witnessing a renaissance, of sorts, as residents migrate to downtown areas.
Read more...What’s Really Driving the Urbanization Trend? - Daily News Article - GlobeSt.com
Despite Looming Clouds, Bright Forecast for U.S. Real Estate via Urban Land Magazine
The latest ULI Real Estate Consensus Forecast calls for relatively smooth sailing ahead as it relates to both continued economic growth and a favorable outlook for commercial real estate investment. Yet, the forecast is not as bullish as it was six months ago, and there are headwinds looming that are expected to temper growth heading into 2017.
The forecast, produced by the ULI Center for Capital Markets and Real Estate, predicts a healthy pace of economic expansion. Gross domestic product (GDP) growth for this year is expected to be on par with the 2.4 percent that was recorded in 2014, while strengthening to 2.8 percent in 2016 and 2.7 percent in 2017. It is notable that the forecast growth for 2016 and 2017 is at the highest levels in eight years, comparable with the 2.7 percent GDP growth that occurred in 2006.
Read more...Despite Looming Clouds, Bright Forecast for U.S. Real Estate - Urban Land Magazine
The forecast, produced by the ULI Center for Capital Markets and Real Estate, predicts a healthy pace of economic expansion. Gross domestic product (GDP) growth for this year is expected to be on par with the 2.4 percent that was recorded in 2014, while strengthening to 2.8 percent in 2016 and 2.7 percent in 2017. It is notable that the forecast growth for 2016 and 2017 is at the highest levels in eight years, comparable with the 2.7 percent GDP growth that occurred in 2006.
Read more...Despite Looming Clouds, Bright Forecast for U.S. Real Estate - Urban Land Magazine
Multifamily Market in U.S. to Remain Strong for Several More Years via WORLD PROPERTY JOURNAL
Based on Freddie Mac's Multifamily Outlook released this week, the U.S. multifamily rental market continues its 5-year streak of robust growth that began just after the Great Recession ended and is expected to remain strong for several more years.
Steve Guggenmos, senior director of Freddie Mac Multifamily investments and research said, "It is now clear that the increase in Multifamily demand is more than a temporary correction stemming from the Great Recession. Favorable demographic trends will support strong multifamily growth for several years. Individual market performance will vary based on the pace of new supply delivered to the market and local economic strength."
Read more...Multifamily Market in U.S. to Remain Strong for Several More Years - WORLD PROPERTY JOURNAL Global News Center
Steve Guggenmos, senior director of Freddie Mac Multifamily investments and research said, "It is now clear that the increase in Multifamily demand is more than a temporary correction stemming from the Great Recession. Favorable demographic trends will support strong multifamily growth for several years. Individual market performance will vary based on the pace of new supply delivered to the market and local economic strength."
Read more...Multifamily Market in U.S. to Remain Strong for Several More Years - WORLD PROPERTY JOURNAL Global News Center
The Nation’s Rent Growth Leaderboard is Heavy on the West via Property Management Insider
Western markets dominate the top spots in the nation’s rent growth leaderboard as of Q3. But that’s not to say performance hasn’t been strong elsewhere, too, with a big numbers coming all across the country.
Watch video...The Nation’s Rent Growth Leaderboard is Heavy on the West | Property Management Insider
Watch video...The Nation’s Rent Growth Leaderboard is Heavy on the West | Property Management Insider
Emerging Trends: Dallas/Fort Worth and Austin Are Top Cities for 2016 via Urban Land Magazine
The commercial real estate industry is increasingly focused on the needs of small firms employing fewer than 50 people where job growth is outpacing larger firms by nearly five to one, according to Emerging Trends in Real Estate® 2016, copublished by PwC US and the Urban Land Institute (ULI).
“The real estate industry’s traditional focus on big cities and large employers is shifting significantly as small businesses emerge as the growth engine for the U.S. economy,” said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. “This is creating disruption in the office sector as it finds ways to create new space models to accommodate these employers.”
Read more...Emerging Trends: Dallas/Fort Worth and Austin Are Top Cities for 2016 - Urban Land Magazine
“The real estate industry’s traditional focus on big cities and large employers is shifting significantly as small businesses emerge as the growth engine for the U.S. economy,” said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. “This is creating disruption in the office sector as it finds ways to create new space models to accommodate these employers.”
Read more...Emerging Trends: Dallas/Fort Worth and Austin Are Top Cities for 2016 - Urban Land Magazine
Renters, get out your checkbooks, hikes are coming via CNBC.com
Property managers in the U.S. are raising rents - possibly by as much as 8 percent next year - as demand rises and vacancies fall, a new survey from property rental website Rent.com found.
"An overwhelming 88 percent of property managers raised their rent in the last 12 months, and there does not appear to be any signs of stopping," the survey of more than 500 U.S. property managers who used Rent.com found.
Read more...Rent.com survey of property managers finds rents rising in 2015, 2016
"An overwhelming 88 percent of property managers raised their rent in the last 12 months, and there does not appear to be any signs of stopping," the survey of more than 500 U.S. property managers who used Rent.com found.
Read more...Rent.com survey of property managers finds rents rising in 2015, 2016
Monday, October 5, 2015
2015 Poised to Be Busiest Year Ever for Multifamily Sales via Multifamily Executive Magazine
As summer turns to fall, a lot of exhausted multifamily investment and finance professionals around the country are wondering whether the scalding apartment sector is hitting—or at least nearing—its cyclical peak.
And with good reason.
Effective rental rates in many markets have risen to unprecedented levels, gobbling up ever-higher proportions of resident incomes. Accordingly, properties are selling at average per-unit prices beyond previous historic highs amid arguably frenzied trading volume. And, thanks in part to ultra-cheap debt financing, the average capitalization rate recorded in major markets compressed to an all-time low earlier this year—with the yields in secondary and tertiary markets closing in on records as well.
Read more...2015 Poised to Be Busiest Year Ever for Multifamily Sales | Multifamily Executive Magazine | Capital Markets, Cap Rates, Finance, Construction Finance, Effective Rents, Transactions
And with good reason.
Effective rental rates in many markets have risen to unprecedented levels, gobbling up ever-higher proportions of resident incomes. Accordingly, properties are selling at average per-unit prices beyond previous historic highs amid arguably frenzied trading volume. And, thanks in part to ultra-cheap debt financing, the average capitalization rate recorded in major markets compressed to an all-time low earlier this year—with the yields in secondary and tertiary markets closing in on records as well.
Read more...2015 Poised to Be Busiest Year Ever for Multifamily Sales | Multifamily Executive Magazine | Capital Markets, Cap Rates, Finance, Construction Finance, Effective Rents, Transactions
Have Apartments Reached Tipping Point? via GlobeSt.com
Call it a ripple rather than a storm surge, yet Reis is seeing apartment vacancy tick upward ever so slightly. “It appears as if the market has finally reached its inflection point during the third quarter,” says Ryan Severino, the firm’s senior economist and director of research, who predicts a faster upward pace in the coming months.
Q3 saw nationwide vacancy inch upward by 10 basis points to 4.3%, thanks to construction slightly outpacing net absorption, according to Reis data released Friday. That represented “a slight acceleration of a trend” that began in Q2 2014, although the uptick was followed by a slight decline in vacancy earlier this year.
Read more...Have Apartments Reached Tipping Point? - Daily News Article - GlobeSt.com
Q3 saw nationwide vacancy inch upward by 10 basis points to 4.3%, thanks to construction slightly outpacing net absorption, according to Reis data released Friday. That represented “a slight acceleration of a trend” that began in Q2 2014, although the uptick was followed by a slight decline in vacancy earlier this year.
Read more...Have Apartments Reached Tipping Point? - Daily News Article - GlobeSt.com
Thursday, October 1, 2015
D-FW apartment rents soar at record rate in third quarter via Dallas Morning News
Dallas-Fort Worth apartment renters this year are getting slammed with record rent increases.
North Texas apartment costs were up almost 7 percent in the third quarter from a year earlier. That’s about three times the average long-term rent increase rate, according a new report by Carrollton-based MPF Research.
“We can’t find a quarter in the past where rent increases were this high year-over-year,” said Greg Willett, MPF Research chief economist.
Read more...D-FW apartment rents soar at record rate in third quarter | | Dallas Morning News
North Texas apartment costs were up almost 7 percent in the third quarter from a year earlier. That’s about three times the average long-term rent increase rate, according a new report by Carrollton-based MPF Research.
“We can’t find a quarter in the past where rent increases were this high year-over-year,” said Greg Willett, MPF Research chief economist.
Read more...D-FW apartment rents soar at record rate in third quarter | | Dallas Morning News
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